Forrestania Resources (FRS AU)'s Untidy Offer For Zenith Minerals (ZNC AU)

• Forrestania Resources Ltd (FRS AU) all-scrip Offer for Zenith Minerals (ZNC AU) is a small M&A deal. Look away now if this is not your bag.

• There are some intriguing aspects surrounding this transaction - after the Offer was made - which are worthwhile discussing.

• I believe there is a case for FRS misleading shareholders. Right now, the bid proceeds, and the Takeovers Panel is signalling caution as it considers Harvest Lane’s application.

The Trade:

• If small illiquid, scrip arbs are your thing, get exposure to Zenith Minerals (ZNC AU) around here.

• At this stage, the Panel makes no comment on the merits of Harvest’s application; and therefore has not (yet) concluded that unacceptable circumstances exist. Or indeed, will.

• A key risk is timing: even if Forrestania clears 50% acceptances, the bid mechanics remain unclear until the Panel decides whether any acceptances need to be voided, or other remedial orders made.